What is repo rate, what is its impact on loan
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In the last MPC meeting in April, the RBI had put interest rate hike on hold and kept the repo rate unchanged at 6.5 per cent. Earlier, to curb inflation, the policy rate repo was increased by 2.5 percent, increasing continuously from May 2022 onwards.
Inflation has come down
The MPC meeting is taking place after Consumer Price Index (CPI) based retail inflation fell to an 18-month low of 4.7 per cent in April. The RBI governor had recently indicated that in May this figure could go down from April as well. Bank of Baroda Chief Economist Madan Sabnavis said that there is a high possibility of RBI freezing interest rates and keeping the policy rate repo at 6.5 percent. The CPI for May will be announced on June 12.
prices may be affected
Experts say that the RBI is also keeping an eye on the progress of monsoon and El Nino may impact the kharif crop, which may also impact prices. Bank of India Managing Director Rajneesh Karnataka told PTI, “As far as bankers are concerned, I would just say that the Reserve Bank’s policy rate repo has already increased by 2.5 per cent. There are expectations from the market in terms of banking That we are not at all expecting an increase in the repo rate as it has already increased significantly and inflation has come down.”
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Karnataka said, “If you look at wholesale and retail inflation, it has come down now. I think RBI will take a pause and not increase the repo rate.” Supporting him, Ashish Pandey, executive director, Bank of Maharashtra, said the RBI would stick to its wait-and-see policy before changing rates.
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